The Indian government may soon allow the sale of ethanol already produced from sugarcane juice and B-heavy molasses (BHM) before it imposed a ban in December last year with immediate effect. As the quantity of ethanol lying with mills is equivalent to 8 lakh tonnes (lt) of sugar, the total quantity of sugar diversion for the biofuel production may reach 25 lt, including 17 lt already allowed for this sugar season (October-September).

“There is no concern on sugar as already close to 300 lt has already been produced, excluding 17 lt diverted for ethanol whereas total quantity may be 310-315 lt. This looks comfortable as the annual sugar consumption in the country is about 280-285 lt,” said an official source. As the opening stock as on October 1, 2023, was 57 lt, with 30 lt surplus from this year added to it, the closing stock in 2023-24 season may be around 85 lt.

No harm in allowing

Pointing out that neither there is a concern on sugar availability nor those ethanol already produced could be of any other use, there is no harm now in allowing mills to sell those ethanol, the source said. However, it may take some time, may be in June, to decide if mills are to allowed to produce ethanol from BHM, the source said.

The decision may also help oil marketing companies to add more quantity into blending amid the ethanol blending with petrol (EBP) rate recorded at 11.87 per cent until March 31 in current ethanol year (November-October), whereas the target is 15 per cent for the whole year.

Sugar mills and distilleries which have invested heavily, as high as ₹150 billion in last three years to increase ethanol capacity, may get a fillip as there was confusion after the government’s overnight ban, industry officials said.

Recently, the All India Sugar Traders Association raised its sugar production estimated this season by 4 lt to 320 lt, but it will still be lower than the 329 lt produced last season. Higher output in Maharashtra and Karnataka is likely to aid in raising the production figures, though Uttar Pradesh will likely report lower output.

According to AISTA’s second estimates, sugar production in Maharashtra is estimated to reach 108 lt against the 96 lt in the first estimates. But, the production in Uttar Pradesh is estimated to decline to 106 lt from 117 lt in the first estimates.